This post provides additional insight into the current trends and future outlook for London's AIM.
Highlights
- Secondary offerings on the London Stock Exchange's AIM remain strong
- £2.1 billion ($3.4 billion) raised in secondary offerings on London's AIM in H1 2010, six fold more than raised in London AIM IPOs
- ‘Operating companies’ listed on London's AIM again capture ~85% of secondary offering funds raised on London's AIM
- Average size of ‘operating company’ secondary offerings on London's AIM continues upward trend
H1 ‘09
- £3.68m ($5.89m) H2 ‘09 - £5.26m ($8.42m) H1 ‘10 - £6.84m ($10.94m)
- Noticeable trend developing between London Stock Exchange AIM secondaries raising < £5m and the £5 - £30m range
< £5m H1 ’09 - 81% H2 ’09 - 77% H1 ’10 - 75%
£5 - £30m H1 ’09 - 15% H2 ’09 - 18% H1 ’10 - 21%
- Relative number of London AIM-listed companies completing secondary offerings on London's AIM normalizes
H1 ’09
- 23% H2 ’09 - 32% H1 ’10 - 24%
- London's AIM has expelled the vast majority of the weak and is supporting those that remain
The success of the secondary offering market on the London Stock Exchange's AIM is
indisputable, which is the defining characteristic of a mature market. Since 2007, secondary offerings on London's AIM have outpaced
London Stock Exchange AIM IPOs. This is expected to continue for
the foreseeable future given the current macroeconomic situation and the
relatively attractive valuations of companies currently listed on London's AIM. Over the medium to longer term, the
expectation is that secondary offerings on London's AIM will abate somewhat as investors’ risk
profiles gradually shift towards London Stock Exchange AIM IPOs.
When reviewing the “All Companies” tables below, one anomaly
should be adjusted for in order to arrive at a fair comparison. During the second half of 2009, there were
three large London AIM Placing & Open Offers which raised an aggregate of £1.0 billion
for real estate investment, development and management companies listed on the London Stock Exchange's AIM. Historically, the vast majority of secondary
offerings on London's AIM take the form of Placings and are much smaller in size. When the adjustments are made, the aggregate secondary
offering funds raised on the London Stock Exchange's AIM during the second half of 2009 drops from £3.4 billion to
£2.4 billion and the average drops from £7.93 million to £5.63 million.
All Companies |
London AIM
IPO Funds Raised
(in £ millions)
|
London AIM
Secondary Offering Funds Raised
(in £ millions)
|
H1 2009
|
222
|
1,433
|
H2 2009
|
388
|
3,387
|
H1 2010
|
350
|
2,107
|
Total
|
960
|
6,927
|
Exclusive of Investment and Real Estate Funds:
‘Operating Companies’ |
London AIM
IPO Funds Raised
(in £ millions)
|
London AIM
Secondary Offering Funds Raised
(in £ millions)
|
H1 2009
|
-
|
1,108
|
H2 2009
|
16
|
2,005
|
H1 2010
|
211
|
1,819
|
Total
|
227
|
4,932
|
The key takeaways from the tables above are that secondary offerings on London's AIM have remained strong and ~85% of the funds raised from secondary offerings on London's AIM were for
‘operating companies’ listed on the London Stock Exchange's AIM, after adjusting for the previously mentioned anomaly
during the second half of 2009.
All Companies |
Number of
London AIM
Secondaries
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
H1 2009
|
335
|
1,433
|
4.28
|
H2 2009
|
427
|
3,387
|
7.93
|
H1 2010
|
308
|
2,107
|
6.84
|
Total
|
1,070
|
6,927
|
6.47
|
Exclusive of Investment and Real Estate Funds:
‘Operating Companies’ |
Number of
London AIM
Secondaries
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
H1 2009
|
301
|
1,108
|
3.68
|
H2 2009
|
381
|
2,005
|
5.26
|
H1 2010
|
266
|
1,819
|
6.84
|
Total
|
948
|
4,932
|
5.20
|
The key takeaway from the tables above is that the average
size of secondary offerings on London's AIM continues to trend upward, even for the London Stock Exchange's AIM as a
whole after adjusting for the previously mentioned anomaly during the second
half of 2009. The average size of
secondary offerings on London's AIM for ‘operating companies’ listed on London's AIM increased 86% from £3.68 million
($5.89 million) during the first half of 2009 to £6.84 million ($10.94 million)
during the first half of 2010.
Consistent with the above (see chart below), there is
a slight, but noticeable, secondary offering trend developing on the London Stock Exchange's AIM with the
breakpoint being £5 million ($8 million).
The relative number of
secondary offerings on London's AIM raising less than this amount has decreased from 81% during
the first half of 2009 to 75% during the first half of 2010 whereas the relative number of secondary offerings on the London Stock Exchange's AIM raising between £5
million ($8 million) and £30 million ($48 million) has increased from 15% to
21% over this same period. Secondary
offerings on London's AIM raising greater than £30 million ($48 million) have consistently
accounted for 4% of the total.
This trend has developed because, in 2009, London Stock Exchange AIM investors were
willing to deploy relatively small amounts of capital to continue to assess the
viability of certain companies listed on London's AIM whereas capital being deployed on London's AIM in 2010 is more
for executing on organic and/or acquisitive growth opportunities.
The relative number of companies listed on London's AIM that were able to complete
secondary offerings on London's AIM during the first half of 2010 normalized at 24%. The chart below illustrates a frothy market
in 2007, the ‘crash’ of 2008 and a wave of relatively small ‘rescue financings’
during the second half of 2009. Looking
back to 2005 and 2006, the relative number of London AIM-listed companies that completed
secondary offerings on the London Stock Exchange's AIM was 48% and 50% per annum, respectively, which is
consistent with the 24% that completed secondary offerings on London's AIM during the first half
of 2010. As previously mentioned, the
breadth and depth of secondary offering activity on London's AIM is the defining characteristic
of a mature market.
The vast majority of weak companies were expelled from the London Stock Exchange's AIM
during 2009 as investors selected those companies that would remain listed on London's AIM by providing access
to secondary offering funds on London's AIM.
